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International trade

If you are considering importing or exporting, you can find tips and instructions in these guides.

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Prepare for importing and exporting

Reasons for foreign tradeThere are many different reasons why companies venture into international markets and buy or sell products across national borders. The reasons can range from the desire to generate growth by selling goods or services in a new market to exploiting international technology and knowledge by purchasing products or services elsewhere.

Although development and modern technology have made it easier than ever to trade internationally, it can still involve uncertainty and risks that trading in the domestic market doesn’t. Even though we know that the world cannot be described with a simple formula and an import or export adventure can start randomly, you might as well prepare yourself for it. You will find tips on how to do that in this guide.

Initially, you should clarify what drives a company to the international market. You can read more about it in the next points.

Of course, there may also be other, more practical reasons such as a foreign customer having heard of your product and wanting to buy it - but in any case, it's a good idea to know your reasons so you can make sure it fits your business strategy.

If an initial request to buy or sell does not work out to start an importing or exporting process, you should find out who else you can trade with.

Perhaps your company already has an existing trading partner, in that case you can sell or buy more. Perhaps you need to find new customers or suppliers. In both cases, a number of questions arise, both on the counterparty's stability and credibility, and on possible economic, political and cultural differences. These concerns are different for importing and exporting, so we will cover them separately over the next few paragraphs.

What to do and what to avoid

It is a good idea to:

Start small to get to know your trading partner

Make sure that the internal resources are in place

Take into account that the process can be lengthy and time consuming

Consider e-commerce if you sell to international customers

Involve the right partners such as agents, distributors and banks in planning

When we talk to companies importing goods from abroad, their first and biggest concern is whether the goods are delivered according to the agreed standard. There are two main things you can do to ensure this. First, you can research the supplier.

Next, make sure you negotiate the contract so that there is full agreement on what the minimum standard is and that your final price covers everything - production, packaging, transport and import taxes.

The second import-related concern has more to do with economy: Do you have the resources to fulfil your obligations? You need to ensure you have the necessary liquidity to meet your supplier’s payment deadlines.

Finally, there are more general concerns - call it the known unknowns - all the things you know could go wrong, but of which you do not necessarily have an overview. The issues may range from the manufacturer’s safety and environmental conditions to the liability for damage caused by the imported goods. These are things you should consider before importing.

We can help you succeed in importing and exporting

Counselling throughout the process

Award-winning solutions

Exporting challengesThe main concern of exporting companies is whether the customer pays the agreed amount and at the agreed time. This concern can be minimized by researching the customer and ensuring the payment terms are clear. You can read more about it in our guide to planning and executing international trade.

The next question is whether your own business is ready to export. Do you have the necessary resources to sell abroad and how does it fit into your business plan? These are questions worth considering before you start exporting.

Finally, there may be some legal and regulatory obstacles to exporting, and customs need to be taken account of as well. You may also need to adapt the product or service to the local market.

Once you have considered these things, you are well equipped to move forward with your exporting adventure.

International trade - planning and execution

When you are ready to start planning for international trade, you should initially assess your business potential. It involves taking a sober and critical look at both your sales potential and your organization's readiness. Maybe using your resources for exporting or importing would take away too much focus from your core business.

If you decide to continue, you need to lay down a more detailed plan for what is going to happen and how. You can start from the following steps.

Research the marketYou should better get to know the market and any potential trading partners.

Especially if you need to export, make sure you get to know your new market. You can benefit from market analysis as well as from talking to any contacts on the market or other companies that have tried to export to the market.

It is important to know your trading partner when importing or exporting. If you are an importer, it is nice to have some assurance that the goods are coming and can also be delivered in the future. And if you are an exporter, you will of course want to have a sense of your customer's ability to pay you.

We will often be able to help you research your counterparty with due diligence so you can get an idea of the company's financial stability and capabilities. We can also help you determine the risk you take to trade internationally. Read more about our Trade Finance products.

You should also consider how language and cultural differences can affect the relationship. You should better get to know the market and any potential trading partners.

Especially if you need to export, make sure you get to know your new market. You can benefit from market analysis as well as from talking to any contacts on the market or other companies that have tried to export to the market.

What to do and what to avoid

It is a good idea to:

Start small to get to know your trading partner

Make sure that the internal resources are in place

Take into account that the process can be lengthy and time consuming

Consider e-commerce if you sell to international customers

Involve the right partners such as agents, distributors and banks in planning

Know your risksYour trading partner is only one of the risks you should take into account when you sell or buy internationally. Below you will find an overview of the types of risk you should consider:

Liquidity risk - Do you buy the required liquidity, or do you sell trust to your customer?Failure risk - What happens with late or missing payments and what if the goods are received late or are not the required quality?Credit risk - What will happen if your trading partner or a supplier of the value chain becomes insolvent?Political risk - How politically stable is your trading partner's country and what will political change mean for the deal?Currency risk - How can fluctuations in exchange rates, inflation and interest rates affect your company's finances?Operational risk - How do you ensure the goods arrive in good condition and the international payment process works smoothly?

We can help you identify and uncover all of these risks, so you do not have to go in blind when starting to trade abroad.

Depending on your company's industry and what you trade abroad, documentation and legislation can be crucial to master. What documentation and permissions do you need and are there any customs issues you need to take care of?

We can help you on an overall level, but you may require legal assistance to make sure you do everything by the book.

We can help you succeed in importing and exporting

Counselling throughout the process

Award-winning solutions

Local NetworkYou may need partners in the country you sell to or buy from. This applies to legal matters and possibly to distribution or transportation. In markets where we have a presence we will typically be able to help you with legal contacts.

Financing and economic conditionsShould you buy, you must of course have money ready by the agreed payment period. And then make sure you find the right way to pay. For example, an account abroad can sometimes be cheaper and smarter for you. We can help you find the right solution.

Both for purchases abroad and overseas sales, you must ensure that your business has the necessary administrative resources to handle bookkeeping, which will typically be more complicated than for domestic trade. This could mean training existing employees or using temporary external assistance.

Constantly evaluate your business planAfter buying abroad, it is a good idea to take a look at your business plan and plans you made prior to the transaction. Did you follow your prerequisites and plans? Does international trade fit into your company's strategy? How could you optimize the process next time?

By answering these questions, your company will be well equipped to make good decisions about possible future international trade.

Protect yourself against foreign trade risks

Modest development in home markets has pushed several companies to look for new customers and grow their markets in recent years. International business opportunities also bring risks that you should be prepared for. Our specialists will help you with payment and risk management related to your exporting and importing business.

Trading in a precarious world imposes demands especially on risk management. How to identify and protect yourself from foreign trade risks? Once you know the risks, you can prepare for them in the best possible way, with the right partners.

What is your business risk management policy?

What are the risks you are willing to accept, and how should you protect yourself? Make sure everyone in your business knows your business risk policy. Find out the background of your business partners and find the right banking connections, the correct payment methods, and the right risk management tools.

Risk: Buyer Credit Risk Risk Management Tool: If you do not receive payment for the whole transaction as an advance, reduce your risk by choosing a payment method: choose your credit or debit card. Or claim a good foreign bank guarantee or a standby credit card for security.

Risk: Country and Bank Risk Risk Management Tool: Use an export broker approved by your bank. If you want to use a bank guarantee for security, do not require the mandate guarantee that you would receive from your bank with a foreign bank counter guarantee. Confirmed standby credit is also a good option.

Risk: Prepay Risk Management Tool: If you pay the entire amount of your purchase as an advance, do not require a pre-payment from your trading partner to get your refund if the transaction is not completed.

Risk: Country and Bank Risk Risk Management Tool: If the policyholder or country involves a political or financial risk, the guarantee is warranted as an assignment guarantee or a confirmed standby remission.

We will help you find the right solutions to make sure you succeed in foreign trade. No refunds are made on the established payment time export bucket: it serves the exporter as an instrument for payments, finance and risk management. You can lower your availability at the shipping stage and thus change the payment time in cash easily and cheaply. Other ways of financing exports can also be found in the country of destination and depending on the size of the trade. Bank guarantees, on the other hand, are well suited as security for the various purposes of foreign trade. They are easy to use and help build trust between trading partners from different countries.

Did you know?

Our Trade Finance services are the best in the Nordic countries for the sixth consecutive year. The ratings were provided by our customers in the annual TNS SIFO Prospera study.

We have a wide network of over 1,300 foreign correspondent banks to manage your business's payments, risk management and finance.

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